By on January 14, 2011

Yesterday’s release of the Congressional Oversight Panel report on the auto bailout pointed out several fundamental problems with the government’s intervention in the auto industry, all of which stem from what the report termed the “mutually exclusive” goals of the Treasury in overseeing its investment in the industry. But that report focused entirely on the post-bailout management decisions by Treasury, ignoring the decisions made during the bailout itself. And though the White House has, in recent months, redefined its goals in bailing out GM and Chrysler to focus on the improved financial performance of the bailed-out automakers, this is clearly a recent recalibration of its political message. As I pointed out in my latest New York Time Op-Ed,

what Mr. Obama called his “one goal” — having Detroit “lead the world in building the next generation of clean cars” — is nowhere near being achieved.

And, as it turns out, the Administration’s actions in the bailout will inevitably come up well short of that goal in at least one important respect.

When the White House’s Automotive Task Force bailed out Chrysler by forming an alliance between the struggling US automaker and the Italian industrial concern Fiat SpA, it gave Fiat some 20 percent of Chrysler’s equity. Fiat also received the right to another 15 percent of Chrysler’s equity in three five-percent chunks, each contingent upon the completion of three government-negotiated commitments. First, it required Fiat to begin commercial production of engines based on its Fully Integrated Robotised Engine family technology in the United States, a goal that was achieved earlier this week. The second commitment requires Chrysler to record $1.5b in revenue from outside the NAFTA zone, as well as Fiat’s

execution… of one or more franchise agreements covering in the aggregate at least ninety percent (90%) o f the total Fiat Group Automobiles S.p.A. dealers in Latin America pursuant to which such dealers will carry [Chrysler] products.

The final commitment of the Fiat-Chrysler alliance has been widely reported in the mainstream media using the language of the White House’s press release, which describes the commitment as

introducing a vehicle produced at a Chrysler factory in the U.S. that performs at 40 mpg

But nowhere in the mainstream media has it been reported whether that 40 MPG number refers to a city, highway or combined rating or whether it refers to an “adjusted” (i.e. what consumers read on the window sticker) or “unadjusted”EPA number. Having received a number of emails seeking clarification on this point, TTAC was heartened to find a link in a footnote of yesterday’s COP report, which put us in possession of the complete Fiat-Chrysler operating agreement [All 168 pages available in PDF format here]. Here we found what the “real reporters” never bothered to dig up: Fiat’s so-called “Irrevocable Ecological Commitment.”

This “commitment” is enshrined in the following “annex” to Fiat and Chrysler’s government-negotiated operating agreement, and reads as follows:

The addendum, as written, seems to be promising: after all, 40MPG combined is far better than, say, 40 MPG highway. But what the “Irrevocable Ecological Commitment” doesn’t specify is what test the government requires for compliance: adjusted EPA, or unadjusted EPA. For this crucial bit of information a little more digging was necessary. Way down, buried in the “definitions” section of the agreement, we finally get our answer:

Here is the dirty truth that neither the government, Fiat, Chrysler, nor the mainstream media has ever bothered to tell the American people: the “green car” that the White House secured US production of will get 40 MPG combined, but that number is to be measured by the “old” (pre-2008), “unadjusted” EPA methodology, which significantly inflates a cars mileage over the number consumers read on an EPA window sticker.

Now that we know the actual criteria for Fiat’s accomplishment of this commitment, the question becomes: did the government secure “the next generation of clean cars” as President Obama promised? The answer seems to be a fairly resounding “no.”At best, the government barely managed to negotiate a commitment to secure production of a vehicle with efficiency equivalent to the “current generation of clean cars.”

40 MPG combined unadjusted translates to almost exactly 30 MPG combined on the “adjusted” EPA test cycle which is used to produce window stickers for vehicles currently on the market. This is hardly a benchmark for a meaningful “Ecological Commitment” in the sense that a significant number of currently-available mass-market cars currently achieve this standard, and the cleanest vehicles on the market exceed it by dramatic amounts. According to the EPA, at least 11 2010 model-year “compact cars” currently achieve the 30 MPG combined adjusted standard. At least six “midsize sedans” achieved the magic number for the outgoing model-year, as did two “upscale sedans,” two convertibles, two station wagons and three SUVs (although the SUVs are all derivatives of the Ford Escape Hybrid).

The most efficient vehicles on the US market also achieve considerably more than 40 MPG on the unadjusted EPA test cycle; for example, the Toyota Prius scores about 70 MPG on the “unadjusted cycle” and the Ford Fusion Hybrid scores around 54 MPG unadjusted. Clearly, the standard for “the next generation of clean cars” should be considerably higher than 40 MPG combined unadjusted.

After all, five percent of Chrysler’s equity, the price taxpayers have paid for this uninspiring “Ecological Commitment,” would be worth quite a bit of money to Fiat if Chrysler’s IPO goes as planned. UBS analysts place a post-IPO valuation estimate on Chrysler of between $11.8b and $27.5b, which means Fiat’s reward for building this car could range from $590m to $1.35b. That’s at least half a billion dollars of taxpayer value going to a foreign automaker for building a car that performs at a level attained by such vehicles as the 2010 Kia Forte, Toyota Corolla and Chevrolet Aveo. And, if the Chrysler insider site Allpar has the correct information, the base model of the “40MPG” car will probably achieve even less-inspiring numbers with its Chrysler “world gas engine.” Consumers will likely have to pay extra for “40 MPG” models using Fiat’s 1.4 liter MultiAir engine.

In his insider account of the auto bailout, Task Force member Steve Rattner writes that the government “struggled” to get Fiat CEO Sergio Marchionne to put up cash for his desired 35% stake in a bailed-out Chrysler, and that the attempt eventually failed. Rattner writes

Eventually, after hard bargaining, Ron [Bloom] succeeded in carving back Fiat’s initial ownership stake to 20 percent, requiring the company to meet meaningful milestones before receiving additional shares…

It’s not clear from Rattner’s account where the 40 MPG “meaningful milestone” came from, but he does relay one anecdote from the Oval Office meeting in which it was narrowly decided to rescue Chrysler which seems instructive:

The President rested his chin on his hands for a few seconds. Then he looked up and said, “I’ve made my decision. I’m prepared to give Chrysler thirty days to see if we can get the Fiat alliance done on terms that make sense to us.” He turned to me and Ron and added, “I want you to be tough and I want you to be commercial.” We took that to mean that we should insist that all our conditions be met in a way that was prudent from the taxpayer’s standpoint.

Not wanting the Chrysler discussion to end on such a down note, [National Economic Council member Brian] Deese -who is anything but shy- piped up from the couch. “I think it’s worth recognizing that there are positive attributes associated with the Chrysler deal if it gets done,” he said. “It’s not all negative, including the fact that while Fiat hasn’t committed money, they have committed themselves with their technology, including a commitment to build a forty-mile-per-hour car in the United States.” People began to laugh, and it took a couple of beats for Deese to realize what he’d said and started laughing along. Building a forty-mile-per-gallon car would indeed be significant — but a forty-mile-per-hour car probably wouldn’t improve Chrysler’s prospects very much.

The sad irony is that, as negotiated by the auto team, Chrysler’s forty-mile-per-gallon car won’t be anywhere near as “significant” as they thought. Just as Deese made a slip of the tongue, task force negotiators made the oldest efficiency calculation mistake in the book: confusing adjusted with unadjusted EPA MPG. Unfortunately, this time nobody will be laughing… except perhaps Fiat CEO Sergio Marchionne.

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78 Comments on “Fiat’s 40 MPG Fiction...”

  • avatar

    My 1971 Fiat Spyder probably got 40 MPG. When it ran.

  • avatar

    Wow. Great research Ed.  The devil is in the details…

  • avatar

    Hell my 87 Sentra (bought new in April 86 for $6200) averaged 41 mpg . Course it was a basic carburated 5 speed with no AC , roll up windows , no power steering , and didn’t even come with a radio . I put a Sanyo high powered stereo in that with two Jenson 6×9 triax speakers in the rear deck and drove it like I stole it for 2.5 years before getting a new 88 CRX Si . I drove that car the same way and never came close to 40 mpg with low 30s being the average . Nowdays I’m glad when my Tacoma gets 26 mpg on highway trips and my DL1000 VStrom pushes close to 50 mpg .

    • 0 avatar

      You may have a very optimistic memory. The gov’t fuel economy site lists an ’87 Sentra as getting 32 on the highway. Maybe you lived on a hill.
      Don’t feel bad, everyone’s full of shit when it comes to their fuel mileage in ‘the good old days’.

    • 0 avatar

      The window sticker said 35 highway and putting mostly highway mileage on it I routinely went well over that and kept a calculator and pad in the car to figure out mileage at each fill up . Sometimes those ratings are at odds with the mileage people actually get and I wonder if they took into account the bare bones zero options base models sold back then as all levels of trim seem to be rated about the same . Anyway it was a 70 horsepower tin can buzz box that developed a slow speed surge no mechanic could figure out – perhaps a lean condition helping the gas mileage . I eventually grew to hate that car and couldn’t wait to get rid of it the last year I had it !

    • 0 avatar

      Zombo – we went through that surging problem with a Honda. I finally figured out that it was the EGR which had gone bad. The aftermarket versions were not good, needed an OEM version.

  • avatar

    And the fuel economy on E85 will definitely not hit EPA figures, adjusted or not. Th’ dadgum guvm’t is its own wurst enemy, confound itall!

  • avatar

    Have an acquaintance who got his hands on a RHD Fiat 500 (e/w base engine at the time) a couple of years ago, drove it from Dana Point, Ca. to Memphis, Tenn. as part of a charity activity and averaged around 47 MPG… got 51 MPG on one tank.

  • avatar

    A lot of righteous frothing here. Everyone laughs at Sergio, but at least he had the brio to take on the running of Chrysler, which at the time was bailed out on a two to one Canada to US per capita tax input.
    So far, Chrysler has done well with no extra taxpayer input, according to people looking at the new interiors, and has not even reaching the TTAC determined break even 95K per month sales. They’ve set up a factory in the US to make MultiAir engines at no cost except to themselves.
    And you’re complaining that, horror of horrors, the promised car won’t even get 40 mpg, but 30. Sorry if I yawn at this startling revelation. A real 30 mpg combined is about 8l/100km or a bit better. Pretty good indeed, Civic or Corolla territory. I really don’t see the problem.
    Were you expecting an actual breakthrough for next to nothing? Let Fiat get on with it — nobody else had the balls to give it a try. And I say this as a taxpayer expecting to get my money back. The lies I hate are GM advertising some overweight SUV getting 5.9l/100km on the highway. Not in this universe.

    • 0 avatar

      I agree with wmba. The righteous frothing from Niedermeyer about the bail outs is starting to remind me of a broken record. Maybe he would have preferred for us to let GM and Chrysler fail…..then we would be subjected to more repetitive frothing about how we should have saved them. I think the bottom line here is that some people just cant be happy unless they are complaining.

    • 0 avatar

      This comment makes no sense to me.
      Niedermeyer does some absolutely outstanding research here and points out that the deal between the government and Fiat is different from what *all* the media are reporting. This is important, because it seems that the taxpayer is getting less than it appeared. You are saying the money was still well spent, but that is a different discussion.

    • 0 avatar

      The government bailing out companies is like you fighting 12 year old bullies for your kid.  It might feel good for a second, but tomorrow another bully is going to come along and kick your wimpy kid’s tail.   These companies are still going to fail.  The market will continue to speak loud and clear- quality and value will win the day.  And that ain’t Chrysler or GM.

    • 0 avatar

      +1 million wmba

      The guv didn’t know? Yeah, sure.

      Marchionne th car guy of the century

    • 0 avatar

      “Niedermeyer does some absolutely outstanding research… ” Maybe so but it seems he only saves his best for the domestics…why not do a little digging regarding protected home markets in Japan or non-tariff barriers in Korea etc.? Ah I see that just wouldn’t have the same sex appeal as slagging a domestic even in light of thier burgeoning success.
      Hey Niedermeyer: rain on somebody else’s parade for a change.

    • 0 avatar

      But sir still reads it.

    • 0 avatar

      In defense of TTAC, if not Niedermeyer directly (as I believe it was Bertel Schmitt who did the write up), the site has covered the whole “protect Japanese market” thing and concluded (IIRC) that not only are there no barriers to entry for U.S. auto makers, that because they are sold in such low quantities that they aren’t subject to some of the rules that the JDM are. They even provided an example of Toyota rebadging the Cavalier for domestic consumption. They even went through the trouble of converting it to RHD, among other upgrades that from here sound pretty good. Even with that I don’t think it sold particularly well.
      Just like in our car market, GM (and any car maker for that matter) needs to offer cars that the marketplace is looking for. I believe GM sells Corvettes and Camaros in Japan. I guess the first thing any of the U.S. automakers could do to do a better job there is offer right hand drive versions of the cars they do offer.

    • 0 avatar

      Barriers and Tarrifs somewhere on the opposite side of the planet, is probably better covered by someone over there.
      Besides, the fact that some Japanese seem to have a fascination for kamikazism, is a poor excuse for us to follow in their footsteps.

    • 0 avatar

      The thing that gets overlooked a lot is that it was either make the deal with Fiat or allow Chrysler to go under (which would have hurt the US economy in several ways).
      Not a fan of the right-wing-conspiracy-nutjob perspective we see so much of on TTAC. But I’ll bet someone’s cashing some fat checks off it. That’s how the the American Right operates nowadays.

    • 0 avatar

      “According to the EPA, at least 11 2010 model-year “compact cars” currently achieve the 30 MPG combined adjusted standard. At least six “midsize sedans” achieved the magic number for the outgoing model-year, as did two “upscale sedans,” two convertibles, two station wagons and three SUVs (although the SUVs are all derivatives of the Ford Escape Hybrid).”

      But perhaps this was exactly the reason for giving that mpg target… I didn’t have time to search the data, seemingly available only by segment, but not by best-to-worse or by manufacturer … but the acid-question is:  Just how many of these high mileage class-leading vehicles did Chrysler have?  If Chrysler was behind and at risk of falling further behind, then this target, given the work and money needed to overcome such a competitive defcit, might seem to be entirely appropriate.

      So far the targets seem in the right areas:
      – transfer technology and invest to get it in production (engine and platform)
      – capacitize and build, in the us, a high mpg car based on fiat platform
      – increase chrysler export sales
      – etc.

      What can be argued is whether the targets were too few, or the rewards were too great, but the basic premise is sound.

    • 0 avatar

      Not a fan of the right-wing-conspiracy-nutjob perspective we see so much of on TTAC. But I’ll bet someone’s cashing some fat checks off it. That’s how the the American Right operates nowadays.
      So nice to be accused of being a “nutjob” and on the take. Tell me, beez, what’s your real name?  Or are you just another internet coward taking anonymous potshots? At least Ed and I and the rest of the writing staff here are willing to put our name on what we write, are you?
      The checks aren’t fat and are usually late. Our bosses are Canadian, not Americans. Shows how much you know.
      The left loves to engage in projection, carrying on about the Koch family exercising their First Amendment rights while those same lefties pocket George Soros’ money.

    • 0 avatar

      Hi Ronnie, Nothing to really do with the thread at hand, but since I know you like history, and you mention Koch, something interesting … the Koch’s once, and perhaps still do, own a hunting lodge built by one of the Hapsburg kaisers, or some such relative, but between the Hapsburh-Koch bookends, the lodge was owned by the Family Krupp (yes, those Krupps), and in the Manchester bio of the family and its eponymous company, was listed as the place where the then senile father of the last krupp was living (hiding out?)when the allies came looking for him (as he was considered one of the major war criminals as his firm, before dementia took hold, had led the rearmament of Nazi Germany – in the end, he was mentally unfit to stand trial, but it was then realized that his son, Alfried, had been running the company for a large part of the war and he was tried and convicted instead) …

      Not long after, the old krupp was discoverd at this lodge, a US Army officer showed up there, to occupy the lodge, and in the name of the Allied Occupation Forces, do a little sport hunting … The Krupp son asked if he knew a man named Bohlen (relative to the Bohlen who was Roosevelt’s translator of Russian at Yalta) who was also like the 2nd cousin of the Krupp son (official name of Krupp is Krupp von Bohlen und Halbach) he encountered at the lodge.  

      The officer indicated he knew Bohlen, but didn’t tell Krupp that Bohlen was his brother-in-law because he wanted to continue to use his Victor’s leverage over the Krupps.  But since the others with the officer had heard all the stories from the officer about his BIL, they were nearly cracking up… (hope I got these facts mostly right, as it has been a long time since I read this book…)

      And years later, the Koch’s bought this lodge…

    • 0 avatar

      Robbie: “Niedermeyer does some absolutely outstanding research here and points out that the deal between the government and Fiat is different from what *all* the media are reporting.”
      Well then maybe he should blame the media for not doing their job instead of inferring that there is some governmental “conspiracy” going on. The info wasn’t that hard to dig up was it? Old EPA vs new EPA? What’s the difference, 3 mpg?

    • 0 avatar

      @wmba, the article points out that the government and its lap dog media misrepresented a deal partially funded by the tax payers for the purposes of scoring points. Sorry if demand a little bit more integrity from the government offends.

      You also misread the line about Sergio and the laughing. It didn’t say everyone is laughing at Sergio. It said everyone IS NOT laughing except Sergio, as in “Ha-ha, I got sweet deal.”

      @thebeelzebubtrigger, who’s to say that keeping Chrysler open isn’t doing more damage in the long to the economy than keeping them open? Not all market change is bad. If Chrysler is truly filling a demand and unable to sustain satisfying the demand for whatever reasons, someone will fill their shoes IF they disappeared entirely. Don’t count your chickens yet.

      @windswords, If the government is going to commit the tax payer to a deal, it should exercise full disclosure. The media should trust but verify everything the government says and report all its findings. But those who follow these things know this won’t happen when a leftist administration is in power. The media will only be so thorough in its investigations with people on the right whether they are in office or not. Case in point, this “investigation” so crucial to the American people: Can you actually see Russia from Alaska?

    • 0 avatar

      Golly this is a long reply string isn’t it.
      kamiller42, you obviously missed out on the years 2002 and 2003. The media was right on top of the Republican president  then, yessiree bob. I wish they would spend less time on the individual from Alaska and more on shedding light on the ills of society but said individual generates ratings.
      Anyway, no offense, have a nice day!

      • 0 avatar
        Dr. Claw

        this is an old thread that I happened upon, but +900000000000

        2002-2003 was a rather low point in the American mainstream media of which we should all be ashamed. I don’t want to read the words “liberal bias” from someone who was not alive then.

    • 0 avatar

      Yes, they were in 2002 and 2003 too. Glad to help.

  • avatar

    First-Generation neon coupe + FIAT Multi-Air 1.4 + 4 airbags = fine by me

  • avatar

    Seriously, Detroit knows how, and has already built, 40mpg cars. Who can forget the Chevette Diesel?

    • 0 avatar

      The Isuzu-powered Chevette Diesel.  My mother had one – an automatic.  It could do 75 mph flat out, and got 40+ mpg all the time.  The accelerator was really just an on-off toggle switch, since it was useless to do anything part-throttle.

  • avatar

    Forgetting about the official language here, I was under the impression that a vehicle on the C-EVO or SCSS platforms powered by the 1.4L Multiair with the TCT transmission was capable of hitting 40MPG combined on the US EPA tests.
    Is that not possible?

  • avatar
    Educator(of teachers)Dan

    Sergio’s face in that picture says: “I wonder if the UPS man has delivered my latest shipment of black sweaters to Auburn Hills?”
    And honest (no fiction here) my 1982 Chevrolet Celebrity (2.5ltr Iron Duke, 3 speed auto) got 29mpg in mixed 50/50 city/highway driving in FLAT NW Ohio.  We should be getting 40mpg out of a 4cyl family sedan like the base Avenger by now.

    • 0 avatar

      I just looked up a 1984 Chevrolet Celebrity 2.5l 3A (oldest model year available), It’s rated 20/28 (23combined) on .  Personal experience means nothing when talking about EPA numbers.  Hell even a 1987 Honda Civic 1.5l 4A only gets 23/29 (26combined) which I owned for 4 years.  For subcompact pre-airbag cars the fuel economy was awful.  A 2011 Escape gets 23/28/25 and its at the bottom for CUV fuel economy.

    • 0 avatar

      Amazing, as my 1984 Mazda 626 (3-speed auto) got 20mpg city and highway.  It didn’t matter where I drove it, it always got 20mpg (it required premium, no less!).  According to, it should have gotten 21/26.
      I also drove it like I stole it, and would regularly make the 180 mile trip to Nashville in a little over 2 hours.  With 84hp and a 3-speed slushbox, it was completely gutless.
      I was so glad when I got my 1992 Infiniti G20 (5speed and regular gas).  I’d average 23 in the city, and 27-30 on the highway (once got in the mid-30s following my dad in a Uhaul halfway across the country). rates it at 21/29.

    • 0 avatar
      Educator(of teachers)Dan

      Well I was constantly calculating it being a broke college kid who at one point rolled pennys for gas.  It is what it is.  I will admit that the state hwy portion of the commute had perhaps one stop sign in a 20 mile strech. 

  • avatar

    Dirty truths such as this (and the non-reporting of them) are business as usual in Washington. CAFE is and always has been a feel-good sham which results in manufacturers dumping econoboxes to rental car agencies.

    Fiat should be rewarded for something worthwhile, like killing the Chrysler 200.

  • avatar

    I thought ALL the new fuel efficiency regulations were based on CAFE, which is more similar to the old EPA numbers than the new ones.

  • avatar

    Got 9 mpg once on flat land, a very strong tailwind in 10th gear with an empty trailer with my 350 Cummins.
    1980s before today’s modern semis with the newest fuel-conserving technologies appeared.
    Was tickled pinkish when the 1972 Duster slant-6 and 3-on-the-tree obtained a steady 30 mpg on the flats.
    Unsure of the 1975 manual 5-speed Honda Civic carlet but recollections of high 30s and low 40s on the freeway when I followed the then 55 mph limit.
    The current Silverado of the weighed-on-the-truck-scale 5,280 pounds…… Hey!!!! my truck weighs a mile!!!!!! has reached a max of 21 mph steady 60 mph on flat freeway but city mpg is rather dreadful but driving has been minimized; if the truck doesn’t move it gets incredible gas mileage; infinite.
    But, the truck IS an alternate abode vehicle so sacrifices were/are acceptable but any future replacement vehicle will be one with room for existence, if needed and better mileage… perhaps a van or similar utilitarian vehicle with enough visual “stealth” to avoid/evade snooping jack-booted thugs.

  • avatar

    I’m with iNeon on this one. Just after the introduction of the original neon, Chrysler showed a neon lite concept with many of its steel parts replaced with aluminum, magnesium, titanium and a front subframe of plastic. The neon was flyweight to begin with at 2500 pounds and the changes cut 500 pounds off of that. It was structurally stronger as it used rivets and adhesive instead of welds. It added a 5 mpg to the stock neon’s 29/38 (or from personal experience 32/40) If Fiat could revisit this it would be pretty cool. The neon’s 20th birthday is coming up in a few years…

    • 0 avatar

      you’ve all got a brand spanking new Neon in the Fiat Linea. Meets all required crash tessts is about same size as original. I don’t believe I’m the only one to see it

    • 0 avatar

      Wow, you’re right! When normal model bloat is taken into consideration the Linea may as well be a third gen Neon. Basically same width and a couple inches everywhere else.
      neon I: L:171, W:67.5, H:54.9
      Neon II: 174.4,     67.4,    56
      Linea:    179.5,     68.1     59

    • 0 avatar


      Thank you for putting up the measurements. I did it by eye. I saw a very few of the original Neon here and wow! what a beaut it was! Now I see the Linea. In terms of bloat it’d be nowhere where Civic and Corolla have gone. You’d have a car with basically the same original dimensions as the original in a thouroughly modern car (with great sheetmetal, BTW). It’d look like the original neon with some extra doses of classy. A hit if there ever was one.

      Just waiting…It’s there. Put a dodge nose. You don’t even have to change back or sides.

      C’mon, someone from the industry must read this!

    • 0 avatar

      Thank you, Marcelo. I should have gone to wikipedia for the info on this car rather than Fiat’s website. Not only are the neon and Linea close in size but the Linea is within 50lbs of the neon. That’s incredible! You’ve made my day, sir.

  • avatar

    lots of pooh and paah, but fact is they are reaching milestones. Thank God! Chrysler survives, as do lots of jobs, and America gets another option to consider when buying new car, Now, again, please, why is that bad?

  • avatar
    steve from virginia

    This is the reason I follow this site, between the spam for this and that are gems of analysis not found elsewhere. Great job.
    The concept that the Obama team or anyone else in the Establishment would promote anything other than business as usual is a fantasy … or Fiat- asy. Chrysler is continuing and will continue to do nothing but produce more SUVs and Giant Pickup trucks until events force them to do otherwise.
    Events such as fuel shortages or Bankruptcy of Chrysler 2.0.
    NOTE: fuel shortages caused because of un-affordability of production will be permanent.
    The lack of leadership in both the industry and government is astounding. More damage to the country could not be done by an invasion of aliens from outer space.
    In the meantime, the world auto industry will continue to destroy both itself and all the other industries ‘giving the people what they want’. People want crack cocaine and machine guns, I guess the ‘industry’ should bend over backward and provide ‘the people’ these as well.
    It’s an ‘either- or’ proposition. EITHER $4 gas is on its way and that is round 2 for the SUV Pickup trucks and another trip down Bankruptcy Alley for the makers. Or, oil prices will sag on account of the inability of the world’s broken down economy to support the higher prices. This is the affordability of production issue. Make no mistake about it, the world economy is past the point right now where fuel prices are unaffordable for consumption. What holds up the facade is trillions of annual subsidy from yours and your childrens’ pockets.
    The choice is to drive a car OR have a job, not both. The next choice is drive a car OR have something to eat.
    This set of choices is where reality lies, not in the lies coming from the Obama crew or Chrysler.
    Car or food, that’s the choice, folks.

    • 0 avatar

      For a least a decade, many Americans been part of the working poor in the US and didn’t feel it.  Credit was easy. Struggling from paycheck to paycheck is not easy.  Everything you worked for could be gone with one prolonged layoff or an illness.
      Unless you are unemployed, the choice isn’t to drive a car OR have job, not both.  One can buy a 5 to 10 year old sled that isn’t everything you desire or for the really frugal – a 96 Honda Civic from Craigslist with a 125,000 miles, which is doable for $2,500 where I live.
      This piece of advice predates the Obama Era.  If you are unemployed, then it will become a choice of car or food when maintenance, insurance and other costs come due.  I learned that hard lesson during the Reagan administration.  I haven’t bought a new car since.  I was working for an oil company at the time, so I don’t blame Reagan.  It was just part of the business cycle of what goes up may come down again.
      When the price of gasoline reaches $4 or $5 in the US, I’ll still be driving.  Maybe not as much as I do currently and for sure I’ll be belly aching about it, but I’ll still be driving.

    • 0 avatar

      “I didn’t have no lunch on account a Larry Mondello ate it all.”
      – Theodore “Beaver” Cleaver

  • avatar

    Nice piece of research Edward, the sort of work that makes everyone glad they read TTAC.

    Chrysler was given to Fiat in order to solve Washington’s political problem by putting a private-sector gloss on the takeover. Fiat realized this from the get-go, which is why they could wait for Washington to cave — on everything. The task force negotiators did not make “the oldest efficiency calculation mistake in the book” about mileage… the Obama administration needed a talking point, and so it contrived a green one. Like the realities of a bad congressional bill, the truth seeps out far too late to matter.

    • 0 avatar
      George B

      tparkit, I’m willing to ascribe incompetence instead of malice regarding the meaning of 40mpg.  However, I do agree that they were desperate to make Chrysler someone else’s problem.

  • avatar

    “Don’t let the perfect be the enemy of the good.” — President Obama, on more than one occasion…

  • avatar

    I got to agree with “obop” the vehicle that doesn’t move is certainly cheap to run. MPG or Litres per 100 klm mean nothing to me.

    If I drive my comfy Impala all week, doing my normal running around it costs me $35 CDN a week. If I drive my ,not so comfy Jimmy it cost me $45 a week.

    Or I trade them both in an a 45 mpg? Volt. Or maybe a 35mpg Cruze

    Great plan… now I’m down to $20 a week,plus hydro. Oh yeah, and $150? a week payment.

    If I keep what I got,and cut my driving %25 I’m saving 10 to 15 dollars a week.

     I know its not practical for a lot of folks, but driving less saves a lot of money.

    • 0 avatar

      Part 2 – Buy the car that you can afford with cash on the barrel head.  That get’s rid of the credit payments, but you still have insurance, maintenance and taxes – even if it is parked most of the time.  Again, not practical for a lot of folks who want more and have to have it now.

    • 0 avatar

      @mikey: Agreed.  The same logic holds true for car repairs, but knowing the future of those repairs is less clear than predicting fuel consumption for a certain amount of driving.  It often makes more sense to keep an old car going than to buy new.  One of my cars is 10 years old, and it’s currently eating a lot of repair money, but replacing it with something equivalent would actually cost more.

  • avatar

    My wife’s ’09 Charger with a 3.5 HO has gotten 29mph on a couple of long hauls since she bought it.  What a farce.

  • avatar

  • avatar
    Ralph ShpoilShport

    The line workers shirt…what does it say?  Does it really say “one goat” in the middle?

  • avatar

    40 mpg is not difficult.
    My car gets 50 mpg easy.
    If i try real hard, i can get it up to 60 mpg
    I hear a lot of WTFs.
    It´s a diesel but no sloth.
    145 bhp and 229 ft-lb in a compact car.

  • avatar

    One problem with fuel economy records is the odometer accuracy or lack thereof. Absent a Mythbusters style test track and controls (with Kari Byron filling the tanks) you might be reminded of the old expression “The older I get the faster I ran as a boy”

  • avatar

    No, there’s no magic bullet here but if a 1997 Dodge neon has an EPA adjusted mileage of 25/35/29 then a Fiat Linea with almost any engine should beat that. At least this will bring Chrysler into contention with the best small cars out there rather than being dead last.

    • 0 avatar

      Yes, and the Neon was proof that Chrysler could produce a decent small car, but they haven’t bothered with anything since.  Their model lineup sort of starts in the middle with the appalling Avenger and the banal Sebring and then jumps to one of the biggest cars on the market or a crossover SUV. 

    • 0 avatar

      Correct. An that is exactly what will kill them once the gas price will near $4. SUV`s and trucks will again severly drop in sales and they have nothing at the bottom line to respond.Forget the 500 2 plus nothing seater for $18000.- It will not cover for the loss.

  • avatar

    atleast crysler is still around. a lot of jobs were still around, rather than crysler cut up and sell bits n pieces to middle kingdom.
    modern day iacocca.

  • avatar

    I’m not feeling the outrage. Did anyone seriously think that FIAT was going to build the 500 or Panda in the USA? I will agree that the true nature of the “40 mpg” promise was buried unnecessarily deeply in the agreement. Yet, in calling this maneuver a “fiction”, you’ve cast your own hyperbole in a rather ironic light.

  • avatar

    In the parsing of words, I believe that Mexico is now a suitable substitute for America in Government talking points.
    building 500 in America, maybe North America, not USA.
    Why were previous comments removed?

  • avatar

    Flip Big Government the finger! Buy a Ford!

  • avatar

    Robert, I looked at a comparison site for old EPA vs new EPA and I don’t think old 40 mpg equals new 30 mpg. More like 35 mpg new EPA.So that is what should be looked at. But I could be wrong.

  • avatar

    Sergio have just inked an agreement with the most feisty part of his workforce at the Mirafiori plant in Italy – they have a complete “portfolio ” of small cars that easily do well over 40 MPG – so that will be a “copypaste ” in Toluca & Jefferson – so stop laughing at Mr. Machione – he will mean a world of difference for the Pentastar

  • avatar

    Okay, maybe the 40-mpg “adjusted” car just gets Chrysler where everybody else is already.  Chrysler WASN’T there.  Their closest thing to a small car has been the Caliber, and the Caliber was lucky to get the same mpg as everybody else’s midsized cars, and that’s if you skipped the AWD.  The PT Cruiser was a cute little car, but under the cuteness, it was a Neon that got 18 MPG city and maybe 25 MPG highway: not far from what the minivans deliver.

  • avatar

    The money type of “green” will always beat out the paranoid environmentalist type of “green”. So long as 40mpg vehicles are either egg-shaped little geekmobiles or wildly cost ineffective hybrids no one will want to buy them. The Obama administration really doesn’t want to see Chrysler go bankrupt again, especially not while chasing some ecological moonbeam they themselves mandated.
    Keep selling JGC’s and Ram pickups; regain financial solvency.

  • avatar

    I liken the 40mpg commitment to a promise a hostage makes to his captors.  The sanctimonious tools that were on the PTFOA and their congressional green allies thought that they could just wave their hands and 40+MPG wondercars would just be birthed in short order.  Now Barbie (math is hard) has discovered that actually running a car company is more difficult than Ms. Pelosi and Mr. Waxman said it would be and reality has set in.
    Parenthetically, Chrysler under Fiat strikes me as far better managed than the crosstown disaster  GM.  Flunkie dunces like Dan Ackerson and Aztek Mark Reuss have spent like drunken sailors and the upcoming vehicles have no greater likelihood of selling than before the spending binge.  Look at the Aveo replacement. Its not even Kia Rio level refined, and ugly as sin.

  • avatar

    Ed methodically and professionally presented evidence that the critical 40mpg claim was misleading.
    It was textbook good reporting and factually dispassionate.
    And some here call it ‘frothing’, right wing and profit-motivated.
    Another example of people who would stamp the decree  ‘hate’, ‘vitriolic’ and ‘hurtful tone’ on text/speech that is counter to their own views before incinerating the condemned verbiage in the Fairness Furnace.

  • avatar

    Big deal, you aren’t reporting anything we all don’t know already. I have many freinds who bought Fiat 500 Primas and they are consistently reporting getting about 42 MPG but the sticker says 37 MPG. The EPA revises the raw data downward to reflect “real driving conditions”, which is that they assume all new cars are bought by teenage hoons who drive around with their foot to the floor all the time.

    Ford advertises the Feista gets 40 MPG but this only applies to the six speed automatic, the stick gets 37. All car companies dink around with these numbers but the CAFE standards are calcualted with the lab numbers and the Chrysler will get 40 MPG on this test.

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